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  • Writer's pictureGeorge Mellor - KloudReadiness, LLC

Subscription Cloud Service Business Obstacles Revealed - Updated

While performing automated Subscription Business Cloud & Digital Services Readiness Assessments for value added resellers (VAR’), IT Solution Providers and Managed Service Providers (MSP’) utilizing our SaaS-based assessment platform we’ve uncovered some solid trends that I believe every Channel Ecosystem Leader and Channel Partner should know prior to creating or accelerating a cloud or digital services (read IoT) business that they want to be a strategic growth component of expanding their existing business.

We have had well over two thousand (2,000) channel partners who’ve interacted with our SaaS-based platform and over the past two (2) years we’ve gained compelling insights into the obstacles channel partners face in creating or expanding a subscription-based services business.

In fact, the commonality of issues that most organizations face in entering a new monthly recurring revenue-based cloud & digital services business is best represented by some of the key insights and statistics that have emanated and been presented by our platform. The key findings include:

  • 82% of channel partners need to alter their current business model to deal with and consistently grow cloud-delivered subscription-based revenue.

  • 84% of channel partners have not effectively determined the revenue, gross profit and cash flow impact caused by altering their business mix and underlying business model.

  • 78% of channel partners need to alter their sales approach to capture cloud-based recurring revenue opportunities.

  • 97% of channel partners suffer from misaligned sales compensation plans and need to significantly change them in order to consistently grow subscription revenue opportunities.

In short, the gaps identified, and key prescriptive advice produced by the platform provides the following high-level recommendations:

  • Channel partners need to perform an assessment to understand their true readiness posture to create a baseline and prioritized transformation roadmap.

  • Channel partners need to clearly understand the financial implications of moving too fast or too slow into a subscription-based recurring revenue model – having success quickly alters the very cash flow you’re looking to use to fund your entry and expansion into a cloud & digital services business.

  • Channel partners need to set aside investment dollars to ensure that they can successfully make the transition – 84% say they’ll use existing cash flow to fund cloud & digital service business investments.

  • Technology provider and distributor ecosystems need to add more enhanced business and organizational transformation programs to help those partners who are willing to make the necessary changes but are unclear of where to start and how to proceed.

We are in the very early innings of the Subscription Economy and many organizations are doubling and tripling down on their digital transformation initiatives.

The lion’s share of the technology dollars that will be spent over the next 24-36 months will be with providers who have strong digital transformation consulting capabilities, understand how to map their solution-stack to complex customer issues, and who are subscription-ready and can provide the business outcomes customer’s want and deserve.

If you are facing some or all of these issues would like to offer our help…

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